Environmental sensitivity a threat to economic recovery

Much of rural America has only recently begun
to really enjoy the fruits of the "Reagan recovery" that has now
almost set a record for longevity in metropolitan America. Fortune
is closely tied to the land and natural resources in rural America
and it takes longer to re-energize that economy. And, now, just
at a time when this sector is starting to have better economic times,
a new threat to recovery, ominous environmental super-sensitivity,
has been pricked.

As mines reopen, as pulp and paper mills modernize and expand, and as
agricultural production picks up, environmental charges are coming hot
and heavy. Although much of the controversy has centered in the Pacific
Northwestwhere timber cutting has been all but stopped due to court
injunctions won by environmental groups alleging endangerment to a little-known
creature called the spotted owl, and in the timber country of southeast
Texas where a red-headed woodpecker supposedly doesn't like to have a
tree cut within three miles of his nestthe intermountain and Upper
Midwest areas are not immune.

As the once silenced sawmills of Montana and Idaho start up again
and pick up steam, preservationist fear resumed and demands were
made that a million more acres of good timber land be designated
wilderness area.

Northwestern Wisconsin, an area just beginning to enjoy a market for
its abundant stands of balsam and aspen with the opening of a new paper
mill in Duluth, is the coming battleground of the environmental clique's
new buzzword, "biodiversity," which means "don't clear-cut." (Clearcutting
is the professional and long-prescribed method of best managing these
species of trees.)

Northern Minnesota is an area whose economy has just recently
begun to feel the favorable economic impact of $1.5 billion of private
timber industry investment: new mills in International Falls, Cloquet,
Duluth, Grand Rapids and Grand Marais; then add significant modernization
projects in Deer River, Bigfork, Marcell, Orr, Bemidji and other
places. But wait, all is not rosy. People down state fear for the
trees and are demanding that paper should henceforth come from recycling
old newspaper. And, after many months of negotiation between economic
interests and environmental zealots about how to best protect wolves
and scenic rivers, harvesting in northern Minnesota forests is now
being jeopardized by a slick phrase called "below-cost timber sales,"
which is just a surrogate issue to "stop cutting on public agency
administered timberlands."

Certainly, the courts will eventually sort out these controversies
by legal interpretation, but the hype will create new issues, new
surrogates of endangered this and that.

Of equal concern is the impact of the strict application of environmental
regulations that the past 10 to 20 years of legislative mandate
have created. It covers big things like dioxins and dumping in lakes
and rivers. But even small projects like trying to beneficiate private
land in a lumber yard can be stopped by the Minnesota Pollution
Control Agency, the Environmental Protection Agency, the Department
of Natural Resources, the Corps of Engineers and others--the cost
to progress can be prohibitive.

Nobody, today, expects that the environment can be trashed just so we
can have economic benefitswe've matured as a society well beyond
that point, thankfully. The economic well-being of rural America rests,
yes, on the wise use of our lands and natural resources. For certainly,
if the land and physical features aren't well-managed, succeeding generations
will suffer. But these resources are being managed better than ever before
and in many cases, like our forests, are being dramatically improved while
being used. On the other hand, if environmental protectionist efforts
become a cloak for no- growth, turn-it-back-to-wilderness schemes, rural
America is in for a tough time; its economy will sputter and its communities
will die. It all seems so senseless. It isn't necessary to pit one against
the other. America can have economic growth and a good environment. As
users and consumers we must be responsible, and as citizens and critics
we must be reasonable.

Rajala Companies, with four lumber mills in northern
Minnesota and one in Ontario, Canada, employs 160 people and includes
an export company. Exports, mainly to Japan and northern Europe,
account for about 25 percent of Rajala Companies' annual business.
The family-owned operation, with headquarters in Deer River, Minn.,
was founded in 1936 by John Rajala's grandfather. Rajala is a member
of the Minneapolis Fed's Advisory Council on Small Business, Agriculture
and Labor.